section 3completing the work sheet and journalizing and posting the adjusting entries what you’ll...

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Section 3 Completing the Work Sheet and Journalizing and Posting the Adjusting Entries What You’ll Learn How to complete the Adjusted Trial Balance section. How to extend amounts to the Income Statement and Balance sheet sections. How to report the net income or net loss for the period. How to journalize the adjusting entries in the general journal. How to post the adjusting entries to the general ledger.

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Completing the Adjusted Trial Balance Section Once the adjustments are entered in the Adjustments section of the work sheet, it is important to prove that the accounts are still in balance. This is done by completing an adjusted trial balance. Section 3Completing the Work Sheet & Journalizing & Posting the Adjusting Entries (cont'd.)

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Page 1: Section 3Completing the Work Sheet and Journalizing and Posting the Adjusting Entries What You’ll Learn  How to complete the Adjusted Trial Balance section

Section 3Completing the Work Sheet and Journalizing and Posting the Adjusting EntriesWhat You’ll Learn

How to complete the Adjusted Trial Balance section.

How to extend amounts to the Income Statement and Balance sheet sections.

How to report the net income or net loss for the period.

How to journalize the adjusting entries in the general journal.

How to post the adjusting entries to the general ledger.

Page 2: Section 3Completing the Work Sheet and Journalizing and Posting the Adjusting Entries What You’ll Learn  How to complete the Adjusted Trial Balance section

Why It’s Important

The work sheet is the source

of information for journalizing the

adjusting entries and preparing

the financial statements.

Section 3 Completing the Work Sheet & Journalizing & Posting the Adjusting Entries (cont'd.)

Page 3: Section 3Completing the Work Sheet and Journalizing and Posting the Adjusting Entries What You’ll Learn  How to complete the Adjusted Trial Balance section

Completing the Adjusted Trial Balance Section

Once the adjustments are entered

in the Adjustments section of the work

sheet, it is important to prove that the

accounts are still in balance. This is

done by completing an adjusted trial

balance.

Section 3 Completing the Work Sheet & Journalizing & Posting the Adjusting Entries (cont'd.)

Page 4: Section 3Completing the Work Sheet and Journalizing and Posting the Adjusting Entries What You’ll Learn  How to complete the Adjusted Trial Balance section

Extending Amounts to the Balance Sheet and Income Statement Sections

Beginning with line 1, each account balance in the Adjusted Trial Balance section is extended to the appropriate column of either the Balance Sheet section or the Income Statement section.

Section 3 Completing the Work Sheet & Journalizing & Posting the Adjusting Entries (cont'd.)

Page 5: Section 3Completing the Work Sheet and Journalizing and Posting the Adjusting Entries What You’ll Learn  How to complete the Adjusted Trial Balance section

Completing the Work Sheet After all amounts are extended to the

Balance Sheet and Income Statement sections, a single rule is drawn across the columns in these sections.

All four columns are then totaled.

The difference between the two column totals in each section is the amount of net income (or net loss) for the period.

Section 3 Completing the Work Sheet & Journalizing & Posting the Adjusting Entries (cont'd.)

Page 6: Section 3Completing the Work Sheet and Journalizing and Posting the Adjusting Entries What You’ll Learn  How to complete the Adjusted Trial Balance section

Completing the Work Sheet (cont'd.)

After the net income (or net loss) is recorded, the columns in the Balance Sheet and Income Statement sections are ruled and totaled.

A double rule is drawn across all four columns.

Section 3 Completing the Work Sheet & Journalizing & Posting the Adjusting Entries (cont'd.)

Page 7: Section 3Completing the Work Sheet and Journalizing and Posting the Adjusting Entries What You’ll Learn  How to complete the Adjusted Trial Balance section

Journalizing Adjustments

The journal entries that update the

general ledger accounts at the end of

a period are called adjusting entries.

The source of information for

journalizing the adjusting entries is

the Adjustments section of the work

sheet.

Section 3 Completing the Work Sheet & Journalizing & Posting the Adjusting Entries (cont'd.)

Page 8: Section 3Completing the Work Sheet and Journalizing and Posting the Adjusting Entries What You’ll Learn  How to complete the Adjusted Trial Balance section

Journalizing Adjustments (cont'd.)

Section 3 Completing the Work Sheet & Journalizing & Posting the Adjusting Entries (cont'd.)

Page 9: Section 3Completing the Work Sheet and Journalizing and Posting the Adjusting Entries What You’ll Learn  How to complete the Adjusted Trial Balance section

Posting Adjusting Entries to the General Ledger

After the adjusting entries are recorded in the general journal, they are posted to the general ledger accounts.

Once the adjusting entries are posted, the general ledger accounts are up-to-date.

Section 3 Completing the Work Sheet & Journalizing & Posting the Adjusting Entries (cont'd.)

Page 10: Section 3Completing the Work Sheet and Journalizing and Posting the Adjusting Entries What You’ll Learn  How to complete the Adjusted Trial Balance section

Check Your Understanding

Which types of general ledger

accounts appear in the Balance

Sheet section of the work sheet?

Section 3 Completing the Work Sheet & Journalizing & Posting the Adjusting Entries (cont'd.)